MUMBAI: Indus Towers and Bharti Infratel are freezing annual rent escalation on their towers for much of Bharti Airtel in many locations while Idea Cellular's rent will continue to rise till it comes at par with what the market leader is paying, said a person close to development.

The companies will also increase the starting rental on each tower for new tenants in keeping with prevailing rates, the person said. So, if the tower companies were offering a new tenancy at Rs 30,000 per month this financial year, next year the rate will become Rs 30,750 and rise proportionately each year in the future.

This puts a spanner in Reliance Jio Infocomm's negotiations for discount on more tenancies. It has spoken to Indus Towers and American Tower Corp. for a contract of 35,000 towers. Neither has accorded the discount Jio the discount.

"We hope to fine tune and finalize the above changes within this quarter," Akhil Gupta, chairman Bharti Infratel said in a call to investors earlier. Since then, deals have been signed and the process is now complete, said a senior official at a top telecom operator. "Right now and going forward, that base rate itself will start escalating, irrespective whether there is a tenancy at that rate or not," Harjeet Kohli, group treasurer had said.

This is part of Indus' move to rationalise rates such that every operator on each tower pays the same rent.

Indus' move comes after operators raised concerns that tower companies were charging differentially between competitors for the same location. Indus is a joint venture between Bharti Airtel, Vodafone India that hold 42% each and Idea Cellular that holds the remaining 16%.

The problem arose because customers that came on the network first agreed to an annual 2.5% increase in rental. Ones that came later, started at the lower base rental and escalated at the same rate, but continue to enjoy the difference that had already escalated.

A person familiar with Indus Towers said it will take around four years for all customers to catch up with each other. The calculation will be made on every tower individually and once everyone has caught up, escalation will be uniform for all tenants of the tower.

In 2018, a large portion of the rental contracts will be up for renewal at Indus Towers. The proposal, which will in a way mean a discount for Bharti Airtel, to a lesser measure for Vodafone India and least for Idea Cellular, will also mean an extension to renewal for the anchor tenant on Indus' Towers.

"For all existing customers whose leases expire in near term, we intend to give an option to extend these leases for appropriate period with suitable rationalization of their existing escalation charges," Gupta had said on the Bharti Infratel analyst call.

"This is a creative solution to a difficult problem," said an official at a competing tower company. The move has averted the mass renewals coming up for Indus Towers that had made competitors salivate at the thought of a possible reshuffle.